South Korea announced that the districts of Gangnam, Seocho, Songpa, and Yongsan, the wealthy parts of Seoul, will face more tightening property market trading rules to halt any speculative transactions that boost home prices.
The Ministry of Land, Infrastructure and Transport stated that until September 30, any apartment transactions in the listing area will need a permit from the local council. Moreover, the council can cancel the transaction unless the buyer intends to stay at the designated place as their primary residence.
The ministry also warned that the number of areas subjected to these rules may increase if the housing market overheats. The mortgage rules would also tighten further, especially those with multiple homes.
The move overturns February’s decision when South Korea allowed some areas in its capital to transact the apartment without the land transaction permit. As a result, the sales and rent prices increased despite hard mortgage rules and weak domestic demand in general.
In the past five years, Median apartment prices rose by double, and last year, its price exceeded 1 billion won or $689,085. The government had to release more houses in the metropolitan area of Seoul to slow down the demand.
However, several policymakers feared the household debt will increase when the house prices resurge. That development could prevent the Bank of Korea from further rate cuts, which need to ease monetary policy to support economic growth.
